Small Business

Beware the Sincerest Form of Flattery

April 01, 2002

By Lisa Bergson "They're just going to copy it." I was half-joking about the small Japanese company that wanted to be the second buyer of our new MTO-1000-H20, the world's first commercial moisture analyzer based on a breakthrough electro-optic technique. All the same, my team and I convinced ourselves that the company, a would-be independent sales representative, was simply a cutting-edge early adopter. But my worst fears may be coming true.

In retrospect, it was all a little fishy. Waiting for a revival of the semiconductor industry, even our own long-standing independent sales representatives have hesitated to make sizable investments in demos of our new device. Why should these people, complete strangers to our business, have been so bold?

Flattered by their commitment, I pushed Tom Mallon, our executive vice-president for sales and marketing, to hurry up and sign them on as reps. After meeting them myself for the first time last week, I'm glad he took his time. And I almost didn't see them at all. My early-afternoon departure for a weekend jaunt to Montreal prompted the Japanese to rearrange their schedule to accommodate mine.

HOMEWORK. Instead of the expected salespeople, the company's CEO arrived with his chief engineers in tow. It turns out these fellows design their own very sophisticated optics-based equipment. If I had done my homework, I would have discovered they make a product that our technology stands to eclipse. Notably, the companies that developed their mature technology have a checkered history of patent infringement and subsequent lawsuits.

Following the bows and the ritual exchange of business cards, I welcomed them into our library. With platters of pastries from the area's best bakery, a bowl of fresh grapes, and plenty of beverages displayed on our old mahogany boardroom table, I was set for a pleasant, if protracted, discussion. But, soon after completing several rounds of thank yous for, among other things, their interest in our MTO, our chief scientist's visit to Japan, Tom's visit to Japan, their change of schedule, our posting their correctly spelled names on the welcome board, and my hospitality, the tone shifted.

Indeed, as we went through our MTO PowerPoint presentation and subsequent discussion, I noticed something odd about the nature of their questions. Bear in mind that by now I've participated in countless talks and presentations on our technology with scientists and engineers around the world. Yet I have never heard questions like the ones raised by these folks.

PROPRIETARY. To my mounting horror, they proceeded to grill my technical people about the precise specifications for our fiber-optic cable ("single mode or multimode?"), highly reflective mirrors ("flat or round?"), interior optical cell diameter, and acousto-optical monitor ("what type?"). These were not the questions of a salesman or a marketer -- or even an end-user. They were the questions of a copyist.

"That's proprietary information, Wen-Bin," I finally interrupted our director of laser analysis before he spilled his guts. The Japanese looked up from their note taking and frowned. I was being obstructive. Damn straight. I didn't spend seven years and millions of dollars pushing to be first-to-market with this technology only to hand it over on a platter. "Tell them nothing," my patent attorney later ad-vised.

In truth, the analytical-instrument market we serve is notorious for piracy. Twice already, I've had European independent sales representatives try to clone our core technology and proceed to grab a share of our already fragmented market. The scheme goes like this: They assume responsibility to sell a particular product, become familiar with it, the market, and the end-users, and eventually replace the third-party product with one of their own.

My only recourse has been to try to stay out in front technically and to develop close relationships with our end-users, making them less likely to accept the bait-and-switch. But, with this new technology, I hoped to enjoy at least a few years of competitive advantage. Nice dream!

OVERREACTING? "I'd like to sell some more instruments before we spawn a new competitor," I told Wen-Bin and Calvin Krusen, our director of engineering, after the Japanese left. They think I'm overreacting - even though a couple of days later, Calvin conceded that their questions were "a little different" -- but I think my execs are overconfident. Calvin boasted to the Japanese that "it'll take anyone else another seven years to catch up to us."

Maybe Calvin is right. But unlike him, I'm always looking over my shoulder. That's how I latched onto Cavity Ring-Down Spectroscopy (CRDS), which had the potential to leapfrog our decades-old core technology. Better we should develop it than someone else. But it's not worth investing in research and development if we're just a stepping stone for someone less intrepid. Lisa Bergson is President and CEO of both MEECO and Tiger Optics. Before joining MEECO in 1983, Lisa Bergson worked as a business journalist at BusinessWeek and freelanced for many business publications. You can visit her companies' Web sites at www.meeco.com and www.tigeroptics.com, or contact her at lbergson@meeco.com